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DeBeers Consolidated Mines

Published on September 15, 2003.

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The DeBeers cartel dates to 1871, when the DeBeers brothers, Boer farmers who had settled in South Africa, paid a shepherd a 25% royalty for each diamond he found on their land. The next year the brothers sold their farm for $30,000; it would yield half a billion dollars worth of gems over the next 75 years.

In 1881, the English-born entrepreneur Cecil Rhodes bought the material rights on the farm. In 1888, Mr. Rhodes merged his DeBeers Mining with a nearby Kimberley mine to form DeBeers Consolidated Mines and control virtually all the world's diamond production.

Under Mr. Rhodes and his successor, Sir Henry Oppenheimer, DeBeers controlled the flow of diamonds to world markets, often gearing levels of production to the projected number of engagements expected in the U.S. and Great Britain. While diamond engagement rings had begun to increase in popularity in the 1920s, fewer than 20% of American brides owned them by the end of the 1930s.

Making diamonds desirable

Because antitrust laws prohibited DeBeers from directly conducting business in the U.S., the company hired N.W. Ayer & Son in 1938 to promote sales of diamonds there. The agency first used trade advertising to inform jewelers—who were concerned that advertising might "cheapen" diamonds—of its intent to launch a national magazine campaign to make diamonds desirable.

From 1939 to '48, the agency ran five separate campaigns, featuring romantic paintings of churches and couples in love. DeBeers supplemented those ads with integrated marketing efforts that employed public relations, product placement and speeches on the desirability of diamonds.

Ayer arranged for movie stars and other celebrities to wear diamond jewelry from the DeBeers collection in movies and at gala events. The agency also created a series of "seminars" on diamonds that were offered to women's clubs and high school assemblies.

In Great Britain, the 1947 marriage and 1953 coronation of Elizabeth II fueled the public's interest in diamond jewelry.

In 1948, before a major agency presentation to DeBeers, Ayer copywriter Frances Gerety scribbled the line "A diamond is forever." Capturing both the durability of the stone and the romantic aspirations of couples entering into marriage, that slogan became the mainstay of the DeBeers campaign in the U.S.

At the same time, Ayer developed the "Four Cs" of diamond buying—cut, color, clarity and carat weight—and included this information in its advertising for DeBeers. Those efforts, as well as events such as diamond fashion shows, allowed Ayer and DeBeers to establish diamonds as the gemstones for American and British women to envy.

By the end of the 1940s, the number of married women in the U.S. who owned diamond engagement rings had increased to 60%. By the 1980s, that figure surpassed 70%. Encouraged by its success in the U.S., DeBeers decided to export the tradition of the diamond engagement ring to other areas of the world. In Europe, for instance, diamonds had traditionally been viewed as portable "nest eggs" and insurance policies against the loss of wealth during political upheaval but, except for royalty, few women actually wore diamond jewelry. DeBeers launched an ad campaign in 1963 to encourage the tradition of diamond engagement rings, importing the "diamond is forever" slogan and translating it into several European languages.

Even more interesting was DeBeers' success in Japan. In 1968, the company commissioned J. Walter Thompson Co. to create a campaign that would help integrate the diamond engagement ring into Japanese wedding customs. When these efforts began, fewer than 5% of Japanese women received diamond engagement rings; by 1981, the figure was 60%.

DeBeers' success in Japan can be attributed to JWT's inspiration that the ring should be positioned as part of the array of gifts offered by the groom's family to the bride's household. DeBeers found Japan to be an especially lucrative market because the Japanese spend three or four months' salary on an engagement ring, as opposed to the "two months' salary" guide established by Ayer for American consumers.

Innovative marketing strategies

In the 1980s and '90s, DeBeers and its advertising agencies continued to develop innovative marketing strategies. One of its most aggressive promotional efforts was the creation of the diamond "anniversary ring." In 1981, DeBeers began positioning diamond-studded wedding bands as gifts for special anniversaries. Ads by Ayer with headlines such as "The band that says you'd marry her all over again" began to appear in men's magazines.

Just three years after the start of the campaign, 30% of all women could identify a diamond anniversary ring. By the late 1990s, one in 10 women in the U.S. owned a diamond anniversary band.

In 1995, DeBeers ended its 57-year relationship with Ayer, awarding the U.S. account to JWT, which already managed the DeBeers account in the rest of the world. In response, Ayer unsuccessfully filed trademark applications for the "Forever" slogan, for jewelry names such as a "diamond anniversary band" and "diamond anniversary ring," and for the "Four C's."

DeBeers owed its remarkable success to its ability to control both the quantity of diamonds available and their price, which increased 50% from 1985 to 1996. However, it was the shaping of consumer aspirations—at a cost of some $200 million a year in ad spending in 34 countries—that made DeBeers especially noteworthy.

By 2000, DeBeers was facing increased competition from other diamond marketers, as particular areas of the globe—especially Canada and Russia—wrested diamond production away from DeBeers. Moreover, jewelers such as Tiffany & Co. and Bailey, Banks & Biddle were leading the way in diamond-cutting innovations, creating stones with more facets and branding those stones with special names. These initiatives undercut DeBeers' marketing efforts.

In response, in 2003, DeBeers introduced a magazine campaign via JWT to promote its "right-hand ring," designed with multiple small diamonds to distinguish it from engagement solitaires and targeted at women 30 to 54 years old with incomes of $100,000 and up.